Discovery - Koch Industries

Discovery
july 2010
THE QUARTERLY NEWSLETTER OF KOCH COMPANIES
Expansive mood
Earlier this year, Georgia-Pacific
announced that it intends to invest
roughly $500 million in new tissuepapermaking technology.
On May 25, Georgia-Pacific closed
on the $400 million acquisition of
oriented strand board facilities from
Canada’s Grant Forest Products, Inc.
GP's growth continued when it closed
in July on the acquisition of Parsons
& Whittemore’s Alabama River and
Alabama Pine pulp mills in Perdue Hill,
Ala., along with other related assets.
Details
The Grant Forest Products acquisition
included Canadian facilities in Earlton
and Englehart, Ontario, as well as plants
in Allendale and Clarendon, S.C.
About 350 employees already work at
three of those facilities. Another 50
are expected to work at the Clarendon
plant when it opens.
“This is our biggest acquisition since
becoming a Koch company in late
2005,” said Mark Luetters, president of
Georgia-Pacific Wood Products. “It’s a
strategic, long-term investment.
“These are world-class facilities and
very complementary assets. From a
strategic point of view, they are a very
good fit with our current wood products operations.”
Luetters believes GP’s size and liquidity
helped make the deal possible. He also
this issue…
credits the financial strength and risktaking mentality of GP’s owner,
Koch Industries.
“We’re taking that chance for two
reasons,” Luetters said. “First, because
we believe things will get better. And
second, because we’re confident these
assets can do well even when things
are tough.”
ABCs of OSB
Oriented strand board, or OSB, is an
engineered structural panel. It is made
by arranging compressed wood strands
in perpendicular layers and bonding
them together with resin.
Steve Feilmeier, Koch Industries’ CFO,
agrees, comparing this purchase with
the acquisition of Farmland’s fertilizer
plants and terminals seven
years ago.
Much like plywood, OSB is
commonly used
in both residential
and commercial
construction for
sub-flooring, roof
sheathing and exterior sheathing.
“A down market in the
fertilizer industry enabled
us to put capital to work
at a time when few others
were willing,” Feilmeier
said. “Those assets
are now very strong
performers for us.”
Oriented strand board being manufactured at
According to
GP’s newly acquired plant in Allendale, S.C.
industry sources,
Stars in Alabama
OSB panel production in North America jumped from about 750 million
As a result of the Parsons & Whitsquare feet in 1980 to 25 billion square
temore transaction, GP is now the
feet in 2005.
largest market pulp producer in North
That growth came to a screeching halt as America and fifth-largest worldwide.
a result of the global recession.
“Our vision is to become the leading,
global supplier of cellulose-based prodIn fact, the timing of the Clarendon
opening is largely dependent on the
ucts,” said Pat Boushka, GP Cellulose
North American housing market, which president. “This acquisition advances
has seen a dramatic drop in new home
us towards our vision while creating
construction.
more value for our customers.”
Calculated chance
Luetters calls the acquisition a “calculated chance” in light of today’s depressed
construction market.
Decision time 2010 EH&S winners
pg 4
pg 6
In addition to its Atlanta headquarters,
GP Cellulose has commercial offices in
Hong Kong; Montevideo; Shanghai;
and Zug, Switzerland.
100-year-old Knight
Perspective: Rich Fink
pg 7
pg 8
Postal Pipeline
As a GP employee, the article entitled
“Watching the Office” in the April issue
of Discovery caught my attention.
This has increased the abundance and
diversity of wildlife on their property,
benefiting both wildlife and their
livestock operation, as well as plant
health, water quality, and general
rangeland health.
The average energy use per square foot
at the Koch tower in Wichita was given
as 169 kBtus.
Carter Smith
Executive director
Texas Parks & Wildlife Department
Austin, Texas
How does that compare
with the Georgia-Pacific
tower in Atlanta?
Pablo G. Dopico
R&D group leader
Georgia-Pacific Chemicals
Decatur, Ga.
The GP tower (which is 10 years
older and 44 stories taller) is averaging 300 kBtus; however, the U.S. EPA
prefers to use overall ratings rather
than kBtus when comparing buildings.
The Koch tower has a rating of 93, which means it
is more energy-efficient than 93 percent of all office
buildings in the United States.
According to Stacy Shirley, chief engineer for the management company responsible for GP’s headquarters
in Atlanta, that building has a rating of 63.
That is well above the national average of 50, and up
eight points from last year’s rating. Further improvement is expected this year.
Thanks in part to Flint Hills Resources,
my daughter, Ashley Alexander, now has
a bachelor’s degree in Business Administration from Texas A&M University
– Corpus Christi.
I want to thank Flint Hills Resources for
its promotion of posthigh school education
in our community.
Flint Hills’ dedication
to young adults in our
community is priceless.
On May 15, Dave Robertson, president and COO of
Koch Industries, spoke at the commencement exercises for his alma mater, Emporia State University.
Koch company employees can learn more about
important issues affecting all of us by visiting
http://kcief.khc.local/. While at home, visit
www.kochind.com and click on Viewpoint.
Thank you very much for your support
of Science Olympiad in Kansas. Our
homeschooled kids have benefitted
greatly from this program.
Chris Hall
Mary Beth Doty
Margie Hubbard
High Plains Home Educators
Garden City, Kan.
On May 26, Matador Ranch was honored with a Lone
Star Land Steward Award from the Texas Parks and
Wildlife Department. Following are comments by
that agency’s executive director.
The Matador
Ranch is unique,
in part simply
because of its
sheer size and
the commitment and scale
of the stewardship occurring
on the ranch.
Ashley’s college years
were a wonderful
growing experience
that you made possible. Thank you again
They are manfor promoting and
supporting education Koch’s Matador Ranch is spread across five Texas counties. aging nearly
130,000 acres
for my daughter and
of
important
wildlife
habitat
using inthe youth of Corpus Christi.
novative and beneficial practices such as
Katherine Alexander prescribed burning, rotational grazing
Corpus Christi, Texas and brush management.
2
Less than a week later, Robertson received this letter
from a father whose twin daughters have both graduated from ESU.
I attended the ESU graduation commencement and wanted to say I
especially enjoyed and appreciated
your address.
Your speech was
a welcome breath
of fresh air. I
feel this country needs more
people standing
up for hard work,
creativeness and
our country’s way.
Thank you for
your words and
enthusiasm. Our Dave Robertson, KII’s president and
children need the CEO. Photo courtesy of Dick Garvey,
University Photography.
same country
we inherited.
David Gonzales
Owner, Achieve Rehab
Great Bend, Kan.
Letters and other submissions become the property of Koch
Industries, Inc., and may be reproduced in whole or in part,
including your name, for any purpose and in any manner.
Letters may be edited for length or clarity.
Discovery
July 2010 | Volume 16 | Number 3
Editorial Board
Philip Ellender
Rich Fink
Jeff Gentry
Dale Gibbens
Mary Beth Jarvis
Charles Koch
Jim Mahoney
Dave Robertson
Questions? Comments?
Contact: Rod Learned
316.828.6136
rod.learned@kochps.com
www.kochind.com
©2010, Koch Industries, Inc. Koch is an EOE. M/F/D/V
Publication Design:
Kayla Knight
Koch Creative Group
International News
Paris - Queen Noor of Jordan with Imran Jaferey, vice president Shanghai - INVISTA produces spandex fiber in
of water and wastewater, Koch Membrane Systems.
Shanghai, Foshan and Lianyungang.
France – Queen Noor of Jordan attended an April 26 awards ceremony in
Paris where Koch Membrane Systems
was honored as the Water Technology
Company of the Year by the International Desalination Association.
That award – voted on by IDA members, among others – is given to “the
company which has made the most
significant contribution in the field of
water technology.”
KMS was chosen for its commitment to the design, manufacture and
commercialization of MegaMagnum®
reverse osmosis elements and pressure
vessels. A single MegaMagnum unit
can process 2 million gallons of water
per day.
“We have invested heavily over the last
10 years, developing outstanding technologies and improving our manufacturing capabilities,” said David Koch,
president of KMS and executive vice
president of Koch Industries.
“We are very pleased to accept this
award, which recognizes our success
and the difficult task of driving technology change in this market.”
Asia-Pacific – When most people think
about INVISTA’s presence in Asia, they
immediately think of China. After all,
INVISTA has built, bought or expanded assets worth hundreds of millions
of dollars there since becoming a Koch
company in 2004.
Even so, few people realize just how
extensive INVISTA’s presence in the
Asia-Pacific region has become.
INVISTA not only maintains offices in
Beijing, Shanghai, Guangzhou and the
Hong Kong Special Administrative Region. It has several plants and ventures
in mainland China, especially along the
industrialized coast.
These include manufacturing sites in
Shanghai that make spandex, nylon BCF
and airbag fiber, and a fiberfill facility
in Suzhou, Jiangsu Province. Spandex
is also made at facilities in Foshan,
Guangdong Province, and Lianyungang,
Jiangsu Province.
INVISTA has an office in Taipei,
Taiwan, and operates a textile research
center in Tao Yuen County in Taiwan.
That center is close to an apparel manufacturing plant.
Although INVISTA recently signed
an agreement to divest its beddingproducts business in China, the
company’s overall direction in Asia
is one of growth.
To the north, INVISTA has sales and
administrative offices in South Korea
and Tokyo and Osaka, Japan. In Siga,
central Japan, a co-owned plant makes
spandex and T400™ fiber.
To the south and west, INVISTA has
offices in Thailand, India, Australia and
Singapore, where the company has a
spandex venture facility in the Tuas
district of western Singapore, and an
intermediate chemical plant at Sakra on
Jurong Island. It has also added a nitricacid production at the Sakra site.
“We are working to capture profitable
growth opportunities everywhere in
Monterrey - Water damage from Hurricane Alex
was extensive.
the world,” said Jeff Gentry, president
of INVISTA, “but especially in the
Asia-Pacific region where economic
growth continues to be promising.
“In China, for example, we will be adding even more spandex capacity later
this year.”
Gentry notes that all of INVISTA’s
businesses are seeing increased demand.
That demand, combined with improved
margins, is reflected in the company’s
much-improved performance.
“In fact,” notes Gentry, “June was
probably our best month in more than
two years.”
Mexico – Although Hurricane Alex was
not a significant factor in efforts to deal
with the Gulf oil spill, the Category 2
storm did bring torrential rainfall to
portions of northern Mexico.
Floodwaters there caused significant
damage to the homes of six employees
who work at INVISTA’s nylon and
LYCRA® fiber production facility in
Monterrey.
Damage to that facility was slight, but
the area’s infrastructure – especially its
roads – will require extensive repairs.
Following the storm, INVISTA promptly
made financial donations to a local relief
agency and area fire departments, and
also arranged the donation of 20 computers to damaged schools in the area.
Meanwhile, INVISTA employees in
Monterrey, Queretaro and Mexico City
raised the equivalent of nearly $6,000
so their affected co-workers could buy
new furniture.
3
Decision time
After wrestling with the worst recession
in a lifetime, many governments are
now facing an even bigger economic
challenge: what to do next.
While the issues are complex, the
debate over next steps essentially boils
down to two schools of thought:
First, there are those who urgently insist
we need to spend more – even if it requires
borrowing money – in hopes of stimulating something better.
On the other side are those who insist
we must get in the habit of spending less
and paying down debts to avoid making
things even worse.
Everyone agrees that the consequences
of a wrong decision could be enormous.
What happened
For years, individuals, businesses and
governments lived far beyond their
means. They borrowed excessively at
government-induced, artificially low
interest rates and then went on spending
sprees.
All that spending appeared to be great for
the economy, which grew at a rapid rate
because of artificial stimulation. But what
was growing even faster was a mountain
of debt and bad investments. Consequently, when the economic meltdown
began in 2008, its effects were fierce.
As the recession spread from the
United States to Europe and beyond,
credit downgrades and defaults reached
record levels. The global financial system appeared to be near collapse.
Home values, commodity prices, stock
values, currency rates, interest rates
and fixed income assets collapsed.
Unemployment rates began to soar, aggrevated by government barriers to the
mobility of employment.
Governments in the European Union
and the United States reacted by
pouring trillions of euros and dollars
into “relief ” and “stimulus” programs
intended to restart the economy.
4
But these actions further undermined
true prosperity.
With the government directing the
economy, resources went to satisfying
political desires rather than the desires
and values of individual consumers.
Of course, since there was no cash on
hand for those programs, governments
borrowed and central banks created
even more money to fund these efforts.
What then?
Many families and businesses are now
slowly paying down their debts and
spending less, especially for things that
aren’t essential. That’s why sales of new
homes and automobiles (overbuilt due
to easy money and government subsidies) have slumped.
When the U.S. government tried to
stimulate sales of
those products
(through the
“cash for clunkers” program and
first-time home
buyers tax credits), sales briefly
rose, but then
dropped after
the programs
expired.
3.7 percent rate in the first quarter.
That compares with growth rates of
5.1, 9.3, 8.1 and 8.5 percent in the first
four quarters following the next-worst
recession since World War II.
On the other hand
So, if individuals and businesses have
decided it’s wise to trim their spending
and pay down debt, what are governments doing? Just the opposite.
In fact, additional deficit spending by
the U.S. government has more than
offset any private sector improvements.
Keep in mind, this additional government spending is financed with borrowed money. Most governments were
already running serious deficits before
they tried to stimulate any recovery.
According to the International Monetary Fund,
advanced economies – like those
of the United
States, Japan and
Europe – now
have public debts
that are averaging
more than 110
percent of gross
domestic prod“The federal budget appears to be on uct. (Emerging
economies, such
an unsustainable path.”
as India and
- Ben Bernanke China, are below
40 percent.)
The drop in demand for goods
and services
created a decline
Chairman,
in industrial
production that
was seen around the world. In Japan, industrial production dropped 40 percent
from its early 2008 peak. Even China
suffered.
Since so much of the world’s economy
depends on consumer spending, this
newly frugal behavior has meant a
slow-growth economic environment.
The U.S. economy grew at an annual
rate of just 2.4 percent in the second
quarter of this year, following a revised
U.S. Federal Reserve
At some point,
a nation will have no reasonable hope
of repaying its debts. The inevitable
result is some sort of default, whether
through outright bankruptcy, a restructuring of payments or devaluation of
the currency.
What now?
Michael Hofmann is chief risk officer for
Koch Industries. He also serves on the
Economic Advisory Council of the U.S.
Federal Reserve Bank in Kansas City.
Hofmann and his team have spent
several months analyzing the global
economic situation and assessing the
risks involved with doing business in
this environment.
The good news, he says, is that the
global recession appears to have bottomed out…for now.
“In general, the Asia-Pacific region
fared better than the rest of the world,”
Hofmann said. “By comparison, Europe
is in much worse shape
and the United States is
somewhere in between.”
However, Hofmann’s
near-term expectations
are sobering. He thinks
the economies of the
United States and Europe
are likely to be in a relatively weak, slow-growth
mode for several years.
Hofmann says recoveries following serious
housing busts and credit crunches typically take four or five years as banks and
households focus on the hard work of
rebuilding their finances.
The process for a government to get out
of debt is even harder, especially in a
slow-growth environment.
Debt binge
In Europe, assistance to Greece and
other nations has already cost European taxpayers far more than expected,
causing some to balk at any notion of
taking on further debt to bail out overextended economies.
The government of France disagrees
with taking a conservative approach,
and suggests that even more must be
done – if necessary – to preserve the
European Monetary Union.
In the midst of all this disagreement,
there are some encouraging signs.
Ireland’s government, for example, has
already settled down to the painful task
of cutting spending and repaying debt. In
the United Kingdom, newly elected Prime
Minister David Cameron and his coalition
government are doing the same.
Britons have been told that a difficult
period of “new austerity” is unavoidable
if there is to be any hope of cleaning
up their dire fiscal mess. (Government
spending in the United Kingdom – as
a percentage of GDP – is even higher
than that of hapless Greece.)
come with the liabilities incurred by the
current generation.”
Hofmann agrees: “While painful and
slow in the short term, it is essential
that we allow our economy to adjust.
“If politicians try to intervene and
prevent or postpone this necessary
adjustment, we run the serious risk of
not just a double-dip recession, but a
true depression.”
But, if we prevent further damage and
begin to reverse the
harm already done, he
says, we should be able
larger the government
to achieve positive longthe lower your growth rate
term growth rates.
“The
gets,
becomes.”
- Michael Hofmann
Chief Risk Officer, Koch Industries
“It's important to realize that prosperity is
dependent on economic
freedom. As citizens, are
we going to advocate for
economic freedom, or
bigger government and
lower well-being?”
Fundamental differences
Taking action
Daniel Tarullo, a member of the U.S.
Federal Reserve’s board of governors,
believes Europe’s experience “is another
reminder, if one were needed, that every
country with sustained budget deficits and rising debt ... needs to act in a
timely manner to put in place a credible
program for sustainable fiscal policies.”
If you are a Koch company employee
in the United States and are concerned
about government debt and overspending, you should let your elected officials
know about your concerns.
That sort of thinking does not sit well
with those urging the government to
spend even more borrowed money on
further “stimulus” for the shaky economy. They say we haven’t spent enough.
Many who might have agreed with that
policy a few years ago now disagree.
“There is nothing progressive about a
government who consistently spend
more than they can raise,” insists Lord
Myners, a high-ranking member of
Britain’s former Labour government.
And, he adds, there is “certainly nothing
progressive that endows generations to
One effective way to speak up is by visiting the Koch Companies Issues Education Forum at http:kcief.khc.local/.
Click on “Want to get more involved?”
for an easy way to directly contact your
elected officials.
Whenever and wherever possible, it’s
important to put your words into action
at the ballot box. Always exercise your
rights to vote and to make your voice
heard by policymakers.
If you’re not registered, get registered
today. The U.S. general election is less
than three months away, on Nov. 2.
Your future depends on being an educated and motivated citizen.
5
EH&S Excellence
Atlanta was the host site for KII’s
that you are serving as role
biggest-ever Environmental, Health
models, helping others foland Safety Conference in May. A relow in your footsteps.”
cord 350 EH&S professionals attended
And the winners are…
the event, which included an awards
ceremony honoring six teams from five Georgia-Pacific, which
had two EH&S winners
different Koch companies.
in 2009, continued its
In his opening remarks, Charles Koch,
winning tradition with two
KII’s chairman and CEO, stressed not
only the necessity of EH&S excellence, more winners this year.
(L-R) Jim Mahoney (KII), Lucinda Legel and Lowell Miller-Stolte (FHR - Pine
Flint Hills Resources,
but the opBend), Sheryl Corrigan (FHR - Wichita) and Charles Koch. FHR was one of six
portunities that INVISTA and Koch2010 EH&S Award winners.
Glitsch also were repeat
excellence can
Koch-Glitsch uses the new facility to
winners. Koch Fertilizer Canada won
create.
measure mass transfer efficiency and the
for the first time.
“If we can
hydraulic capacity of the “internals” the
Allen Lasater, who is now the president company designs for processing plants.
become clearly
superior in all as- of Koch’s Reiss Remediation business,
“We recognized right away that this
pects of EH&S,” helped plan this year’s conference.
project required more expertise than we
said Koch, “we
Lasater, an 18-year Koch company
had,” said Randy Hardy, project leader
will be able to
employee, likes the fact there are no
for Koch-Glitsch. “So we reached out
succeed where
automatic wins (such as one per comothers can’t. This pany) or limits on the number of times to several other Koch companies for the
knowledge that we needed.
will enable us to
a company can win. He believes this
grow and proapproach is more in keeping with our
“I think that’s a pretty good example
vide superior job MBM culture.
of principles six and eight (knowledge
This year’s conference and awards
opportunities.”
and humility) in action.”
“We’ve always emphasized Marketceremony were held in Georgia-Pacific’s
Koch outlined
hometown, Atlanta.
Based Management® when choosing
Once Koch-Glitsch received that valuthree sets of
winners,” Lasater said. “But I think
able input, they were able to design the
initiatives for achieving even higher
this year we really stressed our Guiding pilot plant in a way that went beyond
standards of EH&S excellence.
Principles in a more explicit way.
the EH&S standards typical in the
The first involved building understand- “These awards provide very specific,
mass transfer industry.
ing and commitment to the new vision real-life examples of what EH&S excel“Our team made decisions to go
for Compliance and EHS excellence.
lence looks like and how we can embeyond current environmental rules,”
That vision is currently being rolled out ploy our Principles for greater success.
said Hardy, “which enabled us to not
to all Koch companies.
“Koch-Glitsch, in particular, provided
only reduce boiler emissions but elimiThe second initiative was culturean example everyone can learn from.”
nate a number of potential leaks.”
based, with a heightened focus on the
New kid in town
MBM® Guiding Principles. That focus
2010 EH&S Award Winners
requires commitment from every emKoch-Glitsch won for the enhanced
ployee in every role.
knowledge sharing
Koch Fertilizer Canada – Brandon, Manitoba
Third, Koch
that helped make
Ammonia emissions reduction
stressed the imits new pilot plant
Flint Hills Resources (Asphalt) – Rosemount, Minn.
portance of better
a reality.
Pine Bend asphalt hydrogen sulfide reduction
knowledge sharing
That structure,
and more effective
Georgia-Pacific Consumer Products LP – Atlanta, Ga.
completed in March
risk management
Improved sustainability of transportation resources
of this year, was the
systems. “We need
first new addition
Georgia-Pacific containerboard mill – Brewton, Ala.
to increase our rate
to the 100-acre
Significant opacity reduction
of learning and
Wichita campus
improvement.”
since the tower
Koch-Glitsch – Wichita, Kan.
Wichita – Koch-Glitsch uses this award-winning R&D
Enhanced knowledge sharing during pilot plant construction
Charles Koch con- unit to test distillation and heat transfer processes.
building opened
cluded his remarks
in 1992. It is also
INVISTA – Camden, S.C.
by saying: “I congratulate all the award
believed to be the largest pilot plant of
Reduced energy intensity performance
winners today. This achievement shows its type in the world.
6
Looking Back
Noteworthy
The Big Ripoff–by Timothy P. Carney
There is a popular perception in the
United States that big business is locked
in a death struggle with big goverment.
These two philosophical opposites, we
are told, are mortal enemies.
The truth, as Carney repeatedly points
out, is almost exactly the opposite.
Today, most big businesses are eager to
“jump into bed”
with big government rather than
promote free
markets.
The reason is
simple: big government can prevent competition,
provide subsidies
and guarantee the
markets that allow
corporatism to flourish.
Big government can also threaten and
bribe businesses in order to achieve
policy goals.
It is interesting to note that this book
was written when George W. Bush was
president and Republicans still had a
majority in both houses of Congress.
“The truth,” writes Robert Novak in his
introduction to Carney’s book, “is that
this is a bipartisan affliction transcending party and ideological lines.”
Too True
The Washington Examiner recently
published an article entitled: “What if
all businessmen were as dedicated to
free markets as the Kochs?”
The article includes an in-depth Q&A
with Rich Fink, whose editorial appears
on page eight of this issue of Discovery.
Go to http://kcief.khc.local/ and
look under New Posts to read the story.
“Governments never learn. Only
people learn.”
- Milton Friedman
A best seller:
FLEXERAMIC® structured packings.
M.A. Knight (1883-1956).
Centennial celebration
When Maurice A. Knight graduated
from Buchtel College in Akron, Ohio,
many of his classmates pursued jobs in
that state’s booming rubber industry.
But Knight was more interested in the
possibilities of stoneware, especially the
kind used in chemical manufacturing.
In 1910, Knight risked everything by
buying a local pottery firm. His vision
was to produce a better kind of chemical stoneware.
Competitors
One hundred years ago, Knight’s primary competition was vitrified stoneware
imported from England and Germany.
Although cheaper and easier to get, domestic stoneware of that era was crude
by comparison, and much less durable.
Most U.S.-made vessels were thick
and heavy, and relied on glazes to
withstand chemicals.
Knight had excellent technical knowledge of both clays and chemical processes. He was soon making vessels that
were fully vitrified, glaze-free and tough
enough to be cast in large sizes.
Setbacks
At first, customers were skeptical. Some
insisted on trial runs of anywhere from
six months to two years.
Meanwhile, Knight had to rely on sales
of common pottery items such as jugs,
jars and butter crocks to pay the bills.
The quality of KNIGHT-WARE®, which
was marketed as “acid-proof” and “guaranteed satisfactory,” eventually won over the
skeptics. Business quadrupled in five years.
Then came a series of setbacks: World
War I, a serious recession in 1921 (at the
time it was called a depression) and the
Great Depression.
Knight managed to survive by innovating
new product lines such as laboratory
sinks, stoneware piping and hospital
fixtures (introduced in the late 1920s),
and PYROFLEX® membranes for tank
linings (developed in the mid-1930s).
New horizons
David Koch’s respect for this technology led to the 1981 purchase of several
Knight assets. These were later merged
into Koch Chemical Technology Group.
Since then, Koch Knight has opened sales
offices in Canada, Australia and Brazil,
and acquired additional manufacturing
capacity in East Canton, Ohio, and a
fabrication facility in Baytown, Texas.
Koch Knight is now one of the world’s
largest manufacturers of ceramic and
heat transfer packings. It also engineers,
manufactures and installs industryleading membrane, brick and mortar
acid-proof systems.
The company’s centennial celebration
was held July 10 in Canton. More than
80 employees and their guests were
invited to the event, as were customers
and local officials.
Mike Graeff, president of Koch Knight,
spoke at the celebration.
“We’ve got a truly talented group of people
here who really know what they are doing
and know how to create value for our
customers and for Koch,” Graeff said.
“I’m confident we’ve got even more innovation and growth ahead of us.”
www.kochknight.com
7
Rich Fink Perspective
Executive vice president - Koch Industries, CEO - Koch Companies Public Sector, LLC
8
If you truly want to make the world a
better place, it helps to know the best
ways of reaching that goal.
Koch Industries, Inc. and Koch foundations have spent more than 40 years and
millions of dollars to sponsor research
aimed at discovering
what makes societies
thrive over time.
What we’ve learned
after studying both history and theory is fairly
simple and straightforward: economic
freedom and marketbased policies create the
most opportunity and
prosperity for citizens.
This is especially true
for the poor, who are far
better off in free societies.
Those who think market-based policies
are all about benefiting the corporation
at the cost of the individual or society
have lost sight of the bigger picture.
Economic freedom not only fosters
innovation and greater productivity, it
leads to better environmental protection, health and quality of life for
society as a whole.
And yet, despite clear lessons from the
past, many of the same misguided
policies that have devastated other
nations are now finding a home in
the United States.
Tough lessons
What’s at stake in this struggle is the
future of the United States.
Americans who are concerned about
our future must speak out if this course
toward economic ruin is to be reversed.
Tea parties, for example, reflect a
spontaneous recognition by thousands
of Americans that if they do not act, the
government will bankrupt their families
and the country.
Although our efforts to draw attention to
government overspending pre-date recent tea parties
We have a chance
by many years,
we certainly
to make a difference.
applaud citizens
becoming more engaged in key policy issues. We encourage robust and respectful discussions.
Citizens must hold lawmakers accountable for upholding the Constitutional
Studying history also reveals a painful
truth: Too many societies have undermined their own prosperity by instituting policies that undo what originally
made them prosperous.
As our chairman and CEO, Charles
Koch, wrote in his January Discovery
editorial, Argentina and Venezuela are
modern-day examples of this.
Both of these nations allowed government bureaucracy, spending and deficits
to drag down their standards of living.
They transformed themselves from free
and prosperous societies into nations
burdened by unemployment, escalating
taxes and runaway inflation.
We’ve tried to help people understand
and apply the lessons of history so they
can respond to society’s challenges with
better, more productive policies.
History repeating itself?
After decades of government growth
and spending in the United States, we
now see many disturbing parallels with
South America’s failures.
If you look at the past 10 years of
expanding government bureaucracy,
spending and debt, it’s clear the U.S. is
losing ground. As a nation, we are no
longer generating prosperity for society
as a whole.
We will continue to lose ground until
government policymakers understand
that more spending, more debt, more
regulation and more centralized controls of every aspect of life cannot make
us better off.
The simple truth is that many of the
“new” or “progressive” policies being
promoted in the U.S. are old ideas that
have failed throughout history.
Why in the world would we want to
repeat such serious mistakes?
The stakes
principles of liberty and personal responsibility that helped the U.S. become
productive and prosperous.
There is too much to lose if we do not
speak up – both to our elected officials
and at the ballot box.
Solutions
Three-fourths of all Koch company
employees live and work in the U.S.
What happens in this country inevitably
affects employees elsewhere – for better
or for worse.
When it comes to public policy, I believe the U.S. – not to mention much of
Europe – has been headed in the wrong
direction for quite some time.
Republicans and Democrats alike have
been fiscally irresponsible, spending
more than they should and borrowing
like there’s no tomorrow.
As a nation, we are, quite literally, going
bankrupt.
The upcoming elections in November
will provide a prime opportunity to help
steer things in a different direction.
By educating ourselves on the issues and
voting for those candidates that support
economic freedom and prosperity, we
have a chance to make a difference.
To solve our nation’s problems for the
long term, we must remain principled
and pursue practical, thoughtful solutions – solutions than can actually be
implemented.
We need our employees and all citizens
to speak out about government spending.
That is the best way to get policymakers
focused on the serious problems that
spending and unbridled debt are creating.
Koch Industries and Koch foundations
will continue to advocate for economic
freedom and market-based policy solutions because they are proven pathways
to prosperity for all.
To paraphrase Winston Churchill, a
market-based approach to public policy
may not be perfect, but it beats all the
other alternatives that have been tried.